Macfarlanes has made the first double partner hire in its history, taking on restructuring specialist Francis Bridgeman from Allen & Overy (A&O) and litigator Barry Donnelly from Jones Day.
The move comes hot on the heels of the firm’s first lateral hire in more than two years, with regulatory partner David Berman joining from bank Dresdner Kleinwort in March.
Macfarlanes is known for its historic unwillingness to poach partners from other firms, so swooping for two at once is unprecedented for the City M&A specialist.
Senior partner Charles Martin said the hiring spree did not signal an end to the firm’s policy of organic growth. “We’ve made these hires because we couldn’t grow in those areas rapidly enough,” he added.
All three new arrivals signal that Macfarlanes is keen to expand out of its traditional listed company and private equity client base to work more for financial institutions in areas not reliant on transactional activity.
“There’s a theme here. David [Berman] joined us to focus on financial services regulation. His clients are going to be overlapping with the clients that Barry [Donnelly] is going to be focusing on in terms of financial services litigation,” Martin explained.
Bridgeman specialises in complex debt restructuring and has in the past acted for ABN Amro (now owned by RBS) and KPMG.
Macfarlanes has been hit hard by the drop-off in M&A work since the collapse of Lehman Brothers last year.
During the 2008-09 financial year, its turnover fell slightly to £99m, while average profit per equity partner dropped by 31 per cent, falling below the £1m mark to £846,000.
The firm’s recent hires could be seen as an attempt to reduce its reliance on takeover deals as the fallout from the recession continues to make itself felt.
Martin said the firm was investing in areas that he expected to be active over a long period of time.
“Although our profitability is down, relatively speaking we remain a profitable firm,” he stressed. “Our partners are interested in ensuring that we take the decisions now that mean we’re an even stronger firm.”
Bridgeman was appointed as a partner at A&O in 2000, although he had been a consultant at the firm since May. He worked on one of the biggest insolvencies of 2000 when he was instructed by KPMG as the receivers of Independent Energy, which collapsed with debts of £165m. He also led the A&O team that handled the £1.3bn restructuring of Drax Power.
Bridgeman will work in the restructuring and insolvency group alongside department head Christopher Lawrence.
The practice has become increasingly important to Macfarlanes given the recent lack of transactional activity. One of the firm’s most significant deals of last year was the £1.5bn debt restructuring by the Four Seasons care home group. Macfarlanes advised the company throughout the negotiations.
“The sort of work we see happening in very substantial volumes is much more complex restructurings of the type the Four Seasons represents,” explained Martin. “We have a successful lender-side debt finance practice. We want to be able to offer much more in terms of a restructuring capability.”
Donnelly was a litigation partner at Gouldens when the City firm merged with Jones Day in 2003.
He will head Macfarlanes’ banking and financial services litigation group, working under head of litigation and dispute resolution Iain Mackie.
“We’ve been looking for some time at how to meet the increased demand for our advice on contentious and regulatory matters from banks and financial institutions,” commented Mackie. “Barry has a tremendous record and reputation in this sector.”
He has acted for clients including Standard Bank, Credit Suisse, UBS and JPMorgan. Macfarlanes’ eight-partner litigation group
has been one of the firm’s strongest performers over the past year.
The firm is representing oil and natural resources company Trafigura in a high-profile personal injury case relating to a chemical spill in Nigeria. There are more than 22,000 claimants, with the case set to go to trial in October.
Macfarlanes also continues to act for City Index in claims against the former directors and auditors of Charter arising out of misappropriation of funds by an employee.
The arrival of Bridgeman and Donnelly brings the number of equity partners at the firm to 54.